Hi Missa,

As you start looking into investing you will find a whole new world out there, and if you are anything like me you will be inspired by how much is out there for the taking.

I was in your exact situation a couple of years ago and since then I have been researching and re-educating myself for my new path in life (no more rat race).

What I have found works is to sit back and come up with a plan and some goals for where you want your life to go and then set up your investments around this. This may also require some lifestyle changes, especially with the way that you think about/spend money.

Find out as much as you can about your investment tools (property, shares etc) until you are comfortable in putting your hard earned cash into them and try and keep the momentum flowing.

The biggest problem that I have had to deal with is confidence. It can all get a bit overwhelming sometimes as you are continually extenting your comfort zones, so I have found that you have to really want it and just take the plunge, but make it an educated plunge.

A book that I would strongly recommend is Wink and Grow Rich, also the Richest Man in Babylon is a good starter. Oh, and Steves books of course!!

Hope that helps and all the best

Rob

Hi Cupcake,

What I would recommend first of all is to look at why you are buying an investment property. You are right, it is a really big step and you want to make sure that it is the right step to be taking, and that it fits in with your goals.

I am a firm believer that you need to have a ‘why’ for doing things and every major decision that is made should have a purpose and not just done ‘just cos’.

I would first of all check to see what type of property I would need that fits the criteria of my goals, and also if property even fits the criteria of my goals…

Have a good read of the forums and some books to increase your understanding of the different methods of creating wealth (through property and other means). This will help you to be comfortable with any decisions that you make and you wont just be relying on the words of others (eg real estate agents).

In my opinion investing without a well defined strategy is dangerous.

Just my 2cents worth that is working for me thus far.

Good luck with it all

Cheers
Rob

I am by no means a financial adviser, and this is just my personal opinion, I also dont have much knowledge of the AUS market as I live in NZ….

I would look very carefully at some of the high yielding debentures at the moment, particular where your money is going.

Over the past few months I have noticed a great deal of these high yielding debentures from all these new finance co’s that have been popping up to make the most of peoples current addiction to debt.

There has been a lot of press lately about how a large proportion of the population is taking on too much debt and spending more than they earn and there is obviously a limit as to how long they can carry on doing that before they cannot afford to repay the debt.

Now if this debt has been funded by ‘you’ through a debenture, and it is not secured properly you could stand to lose out.

I would just make sure that the company has been around for a while, and will be using your money sensibly with adequate security, but then I suppose it comes back to how much risk you are willing to take…

Again, just my opinion, but hope it helps

Cheers

Rob[shades2]

In Northeast Valley you will most likely end up with the more ‘placid’ student.
I am assuming it is still the same as when I was there, where the general rule of thumb was that the further you got from campus, the more more placid the students tended to be as far as causing havoc goes.

There are certain areas on campus where your property has a high, if not inevitable chance of being trashed (Castle St for example). But as you say, if the place is tidy to start off with, and you make the effort to keep it tidy, then you should be able to attract the ‘right’ tenant who will look after it.

An example is my first flat, that was in the party area – wasnt a mansion by any means, had a bit of ‘character’ but we looked after it, and apart from a mass of beer being soaked up into the new lounge carpet it was in the same condition when we left.

The successive tenants however completely trashed the place; they kicked and punched in walls, graffitied all over the place etc etc, so I would just be wary of the types of students that you let it to.

Cheers
Rob
[suave]

As an ex Otago Uni Student (Scarfy) myself I would also put out a word of warning…They do not have the greatest reputation for looking after the houses that they flat in, so I would personally make sure that the place will be able to stand up to the Otago student lifestyle

Between tenants there may be a bit of work to do, so I would factor this into the figures. Dont get me wrong, I personally believe Dunedin is a great place to invest…havent bought there myself, but know a couple of people who have invested and done very well out there.

One thing to consider as well, which is a bonus, is the students there typically arent too fussy on the condition of their place, some items that a normal tenant would complain about, become the places ‘character’ to a student….

Also to note is the typical lease structure in Dunedin. Because of the student year, 90% of the places have a fixed term lease covering the holiday period as well i.e from Feb to Feb, and becuase of the demand for some of the places (depending on where and what they are) you can sometimes be guaranteed a fully tenanted place year in and out.

Just my 2cents worth [cap]

Hi Woodend,

The accountant that I mentioned above specialises in this type of thing, and I am sure would be able to help. If you would like his details flick me an email or PM

Cheers
Rob

In a nutshell a property will be positively geared if there is excess income after all the related expenses (insurance, maintenance, mortgage payments etc) and you dont have to put in any additional funds.

In your first scenario you have $136 left after mortgage payments each month. If this covers your expenses such as insurance, rates and maintenance you will have a positive cashflow from the property.

The same philosophy applies to your second scenario.

Hope that helps

Cheers
Rob
[cap]

Dymocks in Wellington have them [cap]